South African government develops plan to restore refineries and cut imports — TimesLIVE
The South African government has begun preparing a comprehensive oil-sector development plan intended to strengthen fuel supply security, support the restoration of oil refineries and reduce dependence on imports. The plan is being advanced by the country’s Department of Mineral and Petroleum Resources, while the Central Energy Fund will engage specialists to develop it, TimesLIVE reports.
The document is intended to become the oil industry’s equivalent of an integrated resource plan. It will cover refining and import strategy, infrastructure development, market regulation, industrial development in the refining segment, and management of the energy transition. The Department of Mineral and Petroleum Resources will chair a coordinating committee for preparation of the plan.
Reforms for the industry
Priorities include incentives for investment in oil and gas exploration and production, modernization of logistics and storage infrastructure, and wider use of railways to transport petroleum products instead of road transport. The Central Energy Fund also believes the plan should provide for an update of the fuel-pricing mechanism to improve market transparency, affordability and stability.
In its tender document, the fund stated that the plan should provide for the simplification of licensing, compliance procedures and approvals. Possible solutions include the digitalization of licensing, automated compliance monitoring and coordination among regulators. The plan will also consider policy measures to restore refineries, develop modular plants, petrochemicals and domestic fuel processing.
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Decline in refining capacity
Before preparing the plan, specialists must assess refinery capacity, import dependence, the condition of infrastructure and fuel demand. South Africa’s economy consumes about 27 billion liters of fuel annually. According to the country’s Reserve Bank, in 2021–2024 South Africa spent approximately 76 billion rand more on imports of refined petroleum products than it would have spent with stable refining capacity.
Imports of refined petroleum products remained at about 25% in 2010–2019, but increased after refineries that provided nearly half of the country’s refining capacity closed in 2020. South Africa’s active capacity now stands at approximately 208,000–250,000 barrels per day, compared with more than 720,000 barrels per day a decade ago.
The Central Energy Fund also proposed restoring the Sapref refinery, which has been idle since early 2022 following the cessation of operations by Shell and BP. At the same time, restoration-related costs are estimated at 100–117 billion rand.
